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Infrastructure & PPPs in Philippines - Q2 2023 Update

PHILIPPINES is set to attract investments in infrastructure sector, driven by recent regulatory changes, including foreign ownership rules and CREATE law. The government is also using PPPs as mode for infrastructure procurement across WASH, digital infra, urban and social infra sectors besides transport and clean energy transition, at national as well as provincial level.

Read more about key developments in Infrastructure and PPPs in Philippines in our country insight.

 

April 2023

PHILIPPINES INVITES FOREIGN INVESTMENT TO SPUR INFRA GROWTH

The Philippines is planning to sustain high infrastructure investment for the next 6 years through the public-private partnership (PPP) mechanism, which will enhance energy, logistics, transportation, telecommunications, and water infrastructure in the country. The spectrum of industries that foreign investors can participate in has grown wider than ever before. The economic liberalization measures that the Philippine government has enacted in recent years have opened up key high-growth sectors to international participation. The amendments to the Retail Trade Liberalization Act (RTLA), Foreign Investments Act (FIA), and the Public Service Act (PSA) relaxed foreign restrictions on investments in the country.

Companies engaged in solar, wind, hydro, and tidal energy are also welcome to invest in the Philippines renewable energy (RE) sector now that it has been opened up to full foreign ownership. The Philippines also offers a simpler and more effective fiscal incentives system that is performance-based, time-bound, targeted, and transparent through the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.


PHILIPPINES’ SAN MIGUEL DISCUSSING MINDORO-BATANGAS BRIDGE PPP

San Miguel Corporation (SMC’s) is in discussion with the local government of Mindoro to construct a 15 km super bridge that will link Mindoro Island with mainland Luzon through Batangas province. The project, which is included in the 10 programs of the Marcos Administration for public-private partnership (PPP), was first proposed by Oriental Mindoro Cong.

SMC’s team has engaged the services of a local company to initially do a bathymetric survey to measure water depth. The proposed bridge will start from Barangay Ilijan in Batangas and pass through Verde Island and land in Barangay Sinandigan in Puerto Galera. The bridge is seen to result in faster and more efficient transport of people and goods and spur local economic growth through job generation, higher investments, and optimization of basic services such as water, power and telecommunications, among others.


ATI TO SPEND PHP 5 BN TO UPGRADE PORT INFRA INTHE PHILIPPINES

Asian Terminals Incorporated (ATI) plans to spend around PHP 5.2 Bn (USD 90.91 Mn) in 2023 on infrastructure upgrades on the Manila and Batangas ports in the Philippines. The company is aiming to finish the modernization of the Batangas passenger terminal and improve existing port facilities during the year. Once the works are completed, the Manila and Batangas ports will have higher passenger and cargo handling capacity to support future market demand. ATI also plans to upgrade its information technology systems as well as explore opportunities in smart cargo storage spaces and ancillary services.


May 2023

PHILIPPINES SEEKING BIDS FOR USD 109 Mn CANCER CENTER PPP

The University of the Philippines-Philippine General Hospital is inviting bids for selected portions of a 300-bed cancer center at its Metro Manila campus. The indicative cost is PHP 6.05 Bn (USD 109.23 Mn). The tender is structured as a build-transfer-operate PPP. Bidding is open to all interested parties, whether local or foreign, subject to the conditions for qualification under applicable rules and laws. The instructions to bidders, the concession agreement and its schedules, and the payment instructions for the purchase of the bidding documents will be available on the PPP Center’s website. The inpatient and outpatient center will serve both underprivileged and private patients.


PHILIPPINES TARGETS USD 45 BN FLAGSHIP INFRA PROJECT PPPS

The Philippine government’s updated list of ‘infrastructure flagship projects’ (IFPs) will entail an investment of PHP 8.2 Trn (USD 146.95 Bn) of which 30% is expected to be raised through public-private partnerships (PPPs).

Of the new list of 194 IFPs, 68 are ongoing, 25 are at the implementation stage, 9 are in the approval application stage, 52 are in the project preparation stage, and 40 are in the pre-project preparation stage. The majority, or 83%, of the total investment, will be made in 119 projects concerning the physical connectivity sector. Other priority areas include agriculture, digital connectivity, health, power and energy, and water resources. The IFPs will be financed through loans, budgetary allocation, and PPPs.


ADB PARTNERS WITH PIDG FOR EARLY-STAGE INFRA INVESTMENTS

The Asian Development Bank (ADB) and London-headquartered Private Infrastructure Development Group (PIDG) have signed a memorandum of understanding for cooperation on early-stage, private sector infrastructure investments in the Asia Pacific region. They will jointly explore potential partnerships to originate, develop, and finance sustainable infrastructure projects. The collaboration may also include single country facilities for credit enhancement instruments in support of infrastructure-related projects.

The region needs around USD 1.7 Trn (USD 30.91 Bn) a year, from 2016 to 2030, to meet infrastructure demand while maintaining its growth momentum, eradicating poverty, and addressing climate change.


PHILIPPINES’ ICTSI TO EXPAND MANILA INTERNATIONAL CONTAINER TERMINAL

The Philippines-listed International Container Terminal Services (ICTSI) is adding another berth to its Manila unit. The new berth will be the Manila International Container Terminal’s (MICT’s) eighth. To be constructed in phases, it is expected to add significantly to the terminal’s capability to service foreign ultra-container vessels of up to 18,000 TEUs. It will create another 400 meters of quay along with 12 hectares of yard space that will bring an additional annual capacity of 200,000 TEUs.

When completed, the MICT will have an annual capacity of 3.5 Mn TEUs. The full build will give the terminal a total berth length of 2,300 meters, a 21% increase in berthing capacity. ICTSI has also started the modernization of berths 1 to 5 and their backup and yard areas. The project includes the installation of additional reefer racks to accommodate approximately 300 TEUs of reefer cargo.


DOTR TO UPGRADE AIRPORTS IN THE PHILIPPINES

The Department of Transportation (DOTR) has earmarked around PHP 62 Mn (USD 1.13 Mn) to upgrade the existing Baguio and Bicol airports in the Philippines. The agency is inviting bids for contractors to carry out works at the Loakan Airport in Baguio City and Bicol International Airport in Daraga.

The PHP 48.45 Mn (USD 880,910) Loakan Airport development project will include the rehabilitation of the passenger terminal building among other upgrades. Work will be completed in 300 days. For the Bicol Airport, the agency will spend around PHP 13.57 Mn (USD 246,727) to correct the runway strip grade. This is expected to take 120 days to complete. During 2023, the DOTR is aiming to complete around PHP 1 Trn (USD 18.18 Bn) in airport projects in the Philippines.


PHILIPPINES’ ILOILO CITY PLANNING HOSPITAL AND TRANSPORTATION PPPS

The local government of Iloilo City in the Philippines is looking at public-private partnership (PPP) agreements for operating an upcoming hospital and improving its transportation system. The city, which has completed a ferry terminal PPP, is currently undertaking a market rehabilitation and housing project PPP.


June 2023

CHINA ENERGY PLANS OFFSHORE WIND PROJECTS IN PHILIPPINES

China Energy Engineering Corporation (CEEC) is looking for opportunities to develop offshore wind projects in the Philippines and other Southeast Asian countries. The Southeast Asia market has lots of wind resources, and the fast economic growth in the Philippines also means rising energy demand locally.

There will be a new batch of offshore wind opportunities emerging in the market, which spells new investment opportunities. CEEC signed an agreement with local renewables developer Energy Oasis Generation Corporation to co-invest in wind projects off the coast of the southern part of the Luzon Island, which could collectively generate 3.1 GW. The Guangdong power design and research institute of CEEC also expressed an interest in engaging in the design and planning of offshore wind farms, as well as engineering, procurement, and construction (EPC) and equipment manufacturing in the Philippines.


JBIC SEEKS PARTNERSHIPS IN PHILIPPINES’ ENERGY SECTOR

The Japan Bank for International Cooperation (JBIC) is seeking partnerships with Philippine companies for energy development and has also expressed interest in the country's proposed sovereign wealth fund. The JBIC is interested in addressing the role of liquified natural gas as a traditional source of power in the Philippines and the need to bring in other sources such as hydropower, solar and wind.

There is a requirement to identify specific projects and determine how to switch to more efficient energy, as well as the development of new technology like hydrogen. The Japanese bank also wants to know the details about the country’s potential, targeted projects, and those still in the pipeline so it could make more tangible, specific proposals.


REPOWER TO DEVELOP SEAWATER PUMPED STORAGE PROJECTS IN PHILIPPINES

Repower Energy Development Corp., Philippines to have seawater pumped storage projects in its portfolio after signing a deal with an Austria-based turbine technology provider. The deal with Gugler Water Turbines GMBH would allow to develop seawater pumped storage projects at several designated sites in the archipelago. The Philippine government wants to increase the renewables share in the power generation mix to 35% by 2030.

Repower’s first project will be a 320 MW seawater-pumped storage facility in the Luzon region. The elevation of this project will be around 300 meters above sea level, and the lower reservoir will utilize the coastline for unlimited seawater intake. Repower has identified an area in Luzon for the development of this project. The company is planning to launch an initial public offering in year 2023 to part finance its 19.5 MW hydroelectric projects as well as acquire more renewables projects.

Repower Energy Development Corp., Philippines will also construct a 200 MW wind power project in Quezon. The renewables arm of Pure Energy Holdings has secured approval from the Department of Energy. The project would cover 2 wind energy service contracts composed of the Silang Maragondon wind farm, which will cover 2,592 hectares of land, and the Pandan Labayat wind farm, which spans 2,025 hectares of land. The proposed grid connection for the projects will be the operational Biga Switchyard Station, which is connected to the National Grid Corp. of the Philippines and presently being utilized by three run-of-river hydropower plants that the company operates in the area.


DOTR SEEKS NEW OPERATOR FOR THE MANILA AIRPORT

The Department of Transportation (DOTR) is seeking a new operator to upgrade and maintain the Ninoy Aquino International Airport (NAIA) in the Philippines. The agency, along with Manila International Airport Authority (MIAA), are awaiting approval from the National Economic and Development Board (NEDA) before inviting bids.

Works will involve upgrading the airport’s air traffic control systems and other facilities. The winning bidder will operate the NAIA for a period of 15 years and recover their investments. Airport assets will continue to be owned by the government. Proposals will be processed based on the public-private partnership (PPP) law. The privatisation process is set to be completed in Q1 of 2024.


WATER PROJECT WORTH PHP 12 BN (USD 218.18 MN) PLANNED FOR MANILA

The Metropolitan Waterworks and Sewerage System (MWSS) plans to implement the Kanan-Agos project in an attempt to provide an alternative water source for Metro Manila and surrounding areas in the Philippines. The project is estimated to cost PHP 12 Bn (USD 218.18 Mn) and will have two phases.

The first phase will have a capacity of 800 Mn litres per day (MLD) and the second phase will have a capacity of 3,000 MLD for a total capacity of 3,800 MLD. The water will be sourced from the Kanan River and will be shared by Maynilad Water Services Incorporated (Maynild) and Manila Water Company Incorporated. MWSS is currently awaiting approval from the National Economic and Development Authority (NEDA) before implementing the project.


PHILIPPINES AGENCIES SIGN AGREEMENT TO ENCOURAGE DIGITAL INFRA PPPS

The Philippines Public-Private Partnership Center and the Department of Information and Communications Technology (DICT) have signed an agreement for greater private sector participation in communications and technology infrastructure. The agreement provides a collaborative framework for project assistance, capacity building, as well as formulation of PPP policies and guidelines. The PPP Center is also assisting the DICT to review a list of concept notes for project proposals. The DICT's role will include evaluation of unsolicited proposals.

 

List of key transactions - Philippines Q2 2023


Source: YOG INFRA analysis, Public Information

 

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With our offices in Singapore, India and UAE, we work on projects globally, and the team brings strong experience in supporting development of infrastructure projects.


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